In his 2011 State of the Union address, President Obama outlined his vision for an America powered by clean energy, traveling by High Speed Rail, and competing in global clean technology markets. Obama set out a clear principle: “[I]nstead of subsidising yesterday’s energy,” he implored, “let’s invest in tomorrow’s.”

Excellent idea Mr. President.

By choosing the future, not the past, President Obama has opened a fierce technology competition with China and Germany, to bring the cost of renewable energy down below gas, coal and nuclear.

Given that Tony Abbott and the Coalition are following the US Tea Party model and reject clean renewable energy on ideological grounds, it’s up to Prime Minister Gillard to follow Obama’s lead.

This week Tony Abbott and the Coalition opened up a new front in their ideological war against climate change action and carbon pricing.

In a move reminiscent of the US Tea Party, renewable energy has become the new target of Australia’s conservative party.

Not content with the ‘blood pledge‘ to repeal the carbon price, Abbott lieutenants Joe Hockey and Andrew Robb announced that a Coalition government would scrap the Clean Energy Finance Council (CEFC). If well designed and administered, the body is a potentially useful aid for Australia’s transition to a 21st-Century clean economy. The plan to abolish the CEFC threatens $10 billion of investment: $5 billion exclusively for renewable energy and the remainder available for cleantech manufacturing, energy efficiency and enabling infrastructure.*

The announcement confirms suspicions that the Coalition is becoming an anti-renewable energy party. This unwarranted position has implications for the domestic renewable energy industry, decarbonising the economy, and the political landscape.

Throughout 2011 Australia’s best-funded environment organisations have been united in support of the Labor government’s push to establish a carbon price. Not everyone, it seems, thinks this is a good thing.

In a compelling essay published in The Monthly, Dr Guy Pearse, the former Liberal party advisor who revealed the “greenhouse mafia’s” influence over national climate and energy policy during the Howard years, challenges the environment groups that uncritically cheer for the government’s flawed climate change policy.

“It’s a far cry from 2009,” notes Pearse, “when the environmental movement split over the so-called Carbon Pollution Reduction Scheme (CPRS). … Now environmentalists are cheering almost as one, not just for ‘climate action’ but for Gillard’s plan.” While the Clean Energy Future legislation is a marginal improvement on its predecessor, the Carbon Pollution Reduction Scheme, it still contains many of the flaws that fuelled the split only a few years ago.

Pearse offers several reasons as to why this is the case: a partisan bias toward the Labor party; the sectors’ increasing focus on incremental gains; and the commonly held belief that markets will solve the climate crisis. Is there more to the story than these contingent factors? Pearse thinks there is and calls attention to the link between Australia’s foremost environmental philanthropists—the Poola Foundation and the Purves Environmental Fund—and the ENGOs that ‘Say Yes’ to the government’s carbon price push:

Last week, Griffith University’s Vlado Vivoda argued that renewable energy “makes no economic or political sense” for Australia.

While we welcome Vivoda’s contribution to the national energy policy debate, the conclusions he draws fail to account for the clear imperatives for quickening the pace of renewable energy deployment.

First and foremost of these imperatives is climate change. Given the prominence of climate change in the political sphere, and the fact that it is a key rationale for advancing renewable energy technologies, it is puzzling that Vivoda discusses Australia’s energy future without acknowledging the implications of climate change.

The bulk of Australia’s carbon emissions are produced by the stationary energy sector. To address climate change, this sector will have to shift from fossil fuels and embrace zero-carbon energy sources.

Last week, the Australian government unveiled the details of its long-anticipated carbon-pricing scheme, which include a fixed-carbon price of $23 per tonne as well as several measures to encourage the research, development, and deployment of renewable energy technologies. In contrast to the death of cap-and-trade in the United States last year, the passage of Australia’s national carbon price legislation is virtually guaranteed. Unfortunately, much of the legislation rests with the magical thinking that international offsets will drive the country’s decarbonisation, rather than full-scale efforts to drive the development and deployment of clean energy technologies.

Under the proposal, Australia will have a fixed-carbon price of $23 per tonne from July 1 2012, before moving to a cap-and-trade scheme in three years time. A Climate Change Authority will be established to advise the government on emission reduction targets and a minimum target of 5 percent below 2000 levels by 2020 has been agreed on. Starting in July of next year, the nation’s 500 largest emitters (excluding the agricultural sector) will be charged for each tonne of carbon they emit. To assuage voters, petrol is excluded from the scheme and compensation will be available for nine out ten households. Industry will receive $9.2 billion to manage the introduction of the carbon price.

Carbon pricing was not an issue the centre-left Labor government chose to champion. It is well known that as Deputy PM, Julia Gillard advised her predecessor Kevin Rudd to drop Labor’s first attempt to price carbon–the Carbon Pollution Reduction Scheme. Under Julia Gillard’s leadership, the party contested the 2010 election with an explicit pledge not to pursue a carbon tax, but after an inconclusive election result the measure was reluctantly accepted as the price of forming a minority government and hanging on to power.

Throughout the carbon price debate Labor politicians have propagated the myth that a carbon price alone will decarbonise the economy. Addressing the Committee for Economic Development of Australia earlier in the year, the Prime Minister claimed “a carbon price will drive another sweeping technological revolution like Information Technology did in the 1980s and 90s.” As I have argued previously, when it comes to clean technology innovation and deployment, carbon price is no silver bullet. Now, with The Greens holding the balance of power in the Senate, the government was forced to concede the limits of carbon pricing and adopt additional renewable energy support measures.

At the weekend, the Gillard government unveiled the details of the long-anticipated carbon-pricing scheme it negotiated with The Greens and lower house independents Rob Oakshott and Tony Windsor. Reports indicate that The Greens used their leverage in negotiations to secure billions of dollars for renewable energy projects administered by two new statutory bodies—the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC).

Throughout the carbon price debate Labor politicians propagated the myth that a carbon price alone will decarbonise the economy. Addressing the Committee for Economic Development of Australia earlier in the year, the Prime Minister claimed “a carbon price will drive another sweeping technological revolution like Information Technology did in the 1980s and 90s.” As I have argued previously, when it comes to clean technology innovation and deployment, carbon price is no silver bullet. Now, with the Greens urging the creation of ARENA and the CEFC, the government was forced to accept that reality.

This week, the Minister for Climate Change Greg Combet argued that if carbon pricing is rejected “climate change policy will become the poisoned chalice of Australian politics for the next decade”.

While it is in the political interest of the Minister and Government to frame carbon pricing in this way, the claim is false. Whatever happens to the carbon price, the imperative for effective climate change policies will remain strong for the simple reason that the problem will not go away.

Combet warns that failure to pass the carbon price “would lock in the status quo and not provide any reward for the innovation, efficiency and technological development that is the only real way of meeting this challenge”. When we look to the United States, it is apparent that the death of cap-and-trade legislation was not the end of climate policies. Measures to decarbonise the US economy are progressing despite the fact that carbon pricing is not currently politically viable.

Carbon pricing has been a difficult policy for Australian politicians to implement and has contributed to the downfall of several senior political leaders. In 2009, Malcolm Turnbull’s own party stripped him of the leadership after supporting the Labor government’s Carbon Pollution Reduction Scheme. Last year, Prime Minister Rudd’s decision to defer the ETS sparked the loss of confidence that eventuated in his downfall. It is no understatement that the current carbon price push is a risk to the Gillard prime ministership. Though carbon pricing has contributed to ill political fortunes, it’s worth remembering that there is more to climate policy than the carbon price.

Climate advocate Joel Dignam asserts that ‘If Gillard’s attempt to put a price tag on pollution fails, climate change…will be seen as a poisoned chalice from which no sane politician could drink.’ He warns that failure to pass the measure will ‘undo years of progress.’ While I appreciate Dignam’s concern, he conflates carbon pricing with climate policy. There are a host of policies to address climate change and decarbonise the economy, the viability of which is independent to the fate of carbon pricing.

A new report published in the Proceedings of the National Academy of Sciences last week finds that the shift in production from developed to developing countries masks increased carbon emissions of countries that pledged emissions reductions under the Kyoto Protocol.

The new analysis shows that while the territorial emissions of ‘Annex B’ countries (defined as developed countries with emission-reduction commitments under the Kyoto Protocol) appear to be stabilising, emissions generated from the production of traded goods increased from 1.6 Gt CO2 to 4.3 Gt between 1990 and 2008 – from 20 per cent to 26 per cent of the proportion of global emissions. Once these consumption-based emissions are accounted for, Annex B countries have increased their emissions.

“[The] study shows for the first time that emissions from increased production of internationally traded products have more than offset the emissions reductions achieved under the Kyoto Protocol,” contributing researcher Glen Peters toldThe Guardian. “This suggests that the current focus on territorial emissions in a subset of countries may be ineffective at reducing global emissions without some mechanisms to monitor and report emissions from the production of imported goods and services.”

The offshoring of emissions that is now occurring is no surprise given the Kyoto Protocol’s two-tiered mitigation framework and globalising production and consumption. The report’s authors suggest improved carbon accounting to incorporate the embodied emissions of goods and services, yet given the slow pace of international climate change negotiations such a change seems unlikely in the short term.

Whether or not the international carbon accounting practices are altered, one thing remains certain: renewable energy substitutes must be made competitive with fossil fuels. International efforts are needed to ensure that wherever production occurs, it is in economies that are decarbonising.

In a speech to the National Press Club yesterday, Climate Minister Greg Combet announced that the government would devote half of the carbon tax revenue for compensating households.

By promising that the carbon price will be a financial boon for Australian households, Labor is attempting to counter Tony Abbott’s populist crusade against carbon pricing.

For weeks, Abbott and his Coalition allies backed by the polluting industries have mounted a fear-mongering campaign. The story the government wants to tell now is that while the Opposition leader is content to make exaggerated claims about economic ruin, Labor will make sure that you’re economically better off with a carbon price. Labor is determined to win the support of ‘hip-pocket voters’ to take the edge off Abbott’s mob.

The Gillard government is setting up another interesting dynamic. By announcing that householders will be ‘overcompensated’ for the impacts of carbon pricing, they have set a limit for calls for a low price and industry exemptions. The logic goes something like this: The higher the price on carbon, the more ‘overcompensation’ one will receive; conversely, the lower the price or narrower the coverage, the smaller the compensation.

Politics aside, the question now remains – what should they do with the remainder of the revenue? To cement its credibility on climate change the Gillard government must commit to investing the remaining share of the carbon price revenue to lay the foundations of a zero emissions economy. The government has a responsibility to protect low-income householders from carbon price impacts, but it also has a responsibility to invest in decarbonising Australia.